Vietnam Considers Allowing Margin Trading on Over-the-Counter Market

(Bloomberg) -- In another effort to boost liquidity, Vietnam is considering allowing margin trading on a regulated over-the-counter market.

The State Securities Commission has asked the Hanoi Stock Exchange to work on a margin-trading proposal for the Unlisted Public Company Market it controls, Pham Hong Son, the commission's vice chairman, said in a phone interview. The finance ministry will make the final decision, though Son didn't elaborate on a timeline.

Vietnam has sought to boost liquidity in a market where there effectively are few shares to trade. It already relaxed foreign-ownership limits for some industries, sped up the process of reducing government stakes in companies and added new products to the derivatives market it started in 2017. While Vietnamese shares have suffered from concerns over the impact of the coronavirus, the hit should be only temporary, Son said.

“In the long term, Vietnam's stock market is relatively good, with macroeconomic fundamentals that remain positive,” Son said.

He didn't provide a list of companies for which margin trading may be allowed but said they will need to meet certain requirements related to business performance, corporate governance and data transparency. Almost 900 firms trade on the UpCom, including Airports Corp. of Vietnam JSC, FPT Telecom JSC and Viettel Global Investment JSC.

The regulator has also asked Vietnam Securities Depository to work on a proposal to reduce fees on derivatives trading to help boost the stock market, Son said without elaborating.

To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Cecile Vannucci, Margo Towie

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